Italia Viva withdraws its trust in the Conte government, Matteo Renzi announced in a press conference on Wednesday evening. Renzi accused the PM Giuseppe Conte of seeking to monopolize power and of undermining democratic principles while calling the refusal of the government to consider an ESM loan "irresponsible". The announcement was followed by the resignations of Italia Viva's two ministers - Teresa Bellanoca (Agriculture) and Elena Bonetti (Family and Equal Opportunity), which promptly Conte accepted.
Speaking to media earlier on Wednesday, the PM Giuseppe Conte said that he still had hopes that a government crisis may be averted through the facilitation of a new pact between the majority parties. Conte's rhetoric leading up to Renzi's press-conference had softened markedly compared to Tuesday when he rejected the notion of heading another government with Italia Viva. Indeed, the PM's earlier statements also came under criticism from some circles of the PD and the M5S, who thought it may have pushed Renzi over the edge. However, once the resignations of Italia Viva's ministers were on his table, Conte reverted back to criticism, accusing Renzi of causing "considerable damage to the country". The PM claimed he had continued negotiations until the last minute, but that the road ahead of him had been "littered with mines". The leader of the PD Nicola Zingaretti was equally critical, calling Renzi's choice "incomprehensible".
Shortly after Renzi's announcement, the centre-right coalition came forward with a call for Conte's resignation and snap elections, saying that this would be the best way to guarantee a stable government. While we view this as one of the least likely scenarios, the possibility for snap elections has increased markedly over the last few weeks. Even so, our first impressions are that Giuseppe Conte will try to find sufficient support in Parliament (especially the Senate) in order to reclaim a functioning majority.
Bringing in MPs from other parliamentary groups (and the mixed group, in particular) will be a challenge, but there's also still some hope that a few of Renzi's deputies and senators may opt to keep their seats rather than be swept away by snap elections. These will argue that Renzi did not have sufficient arguments to sink the government (which he probably didn't), while also recognising the government's concessions to Italia Viva on the NRRP as sufficient (which they probably weren't). Conte will also seek "responsible MPs" in the ranks of the opposition - an option which cannot be excluded with regard to pro-EU Forza Italia deputies and senators fearful of Salvini's rise to power.
If Conte's efforts are unsuccessful and he opts to hand in his resignation to Mattarella, a government of national salvation will be the next most likely outcome from the crisis, possibly under Matteo Renzi's long-term favourite for the PM position - Mario Draghi. While President Mattarella has urged the political parties to quickly find a way out of the current state of uncertainty, we believe that he will remain patient with Conte. If the PM fails, we expect Mattarella, in his turn, to try to find a way in which the current parliament can see out its term. Snap elections are thus a distant third possibility at this point, in our view.